BREXIT: What Next?

What next following the Supreme Court Decision?

On Tuesday 24 January 2017 the Supreme Court upheld an earlier High Court ruling that Article 50 (the mechanism through which the UK will commence the formal process of leaving EU) cannot lawfully be triggered without an Act of Parliament.

So what happens next?

Brexit so far:

As Members will be aware on 24 June 2016, the result of the EU referendum was declared with a majority of voters deciding that the UK should leave the EU. Following the resignation of David Cameron, the new Prime Minister Teresa May announced that she would trigger Article 50 before the end of March 2017.

The government’s proposal for triggering Article 50 was challenged by judicial review in proceedings before the High Court of England and Wales (Miller and Santos) and the High Court of Justice in Northern Ireland (R (McCord and others) v HM Government and others.

The key findings arising from those proceedings were:

the government could not issue notice under Article 50 by way of the Royal prerogative and would require the authorisation of an Act of Parliament; and

there was nothing in the 1998 Good Friday Agreement to prevent the government triggering Article 50.

The Supreme Court considered appeals in respect of both of these points and held:

An Act of Parliament is required before Article 50 can be lawfully triggered

The Supreme Court ruled by a majority of eight Justices to three that MPs and peers must give their consent via an Act of Parliament before the government can trigger Article 50 and formally initiate Brexit.

In reaching its Decision the majority of Justices found that whenever EU institutions make new laws, those new laws become part of UK law. Therefore, EU law is an independent source of UK law until Parliament decides otherwise. The withdrawal of the UK from EU Treaties will result in a source of UK law being cut off and certain rights enjoyed by UK citizens will change. In light of this the Supreme Court found that the government cannot trigger Article 50 without Parliament authorising that course.

Northern Ireland challenge: There is no requirement to consult the devolved assemblies

The Supreme Court Justices reached a unanimous decision that the government is not legally obliged to separately consult the Scottish Parliament and Welsh and Northern Ireland assemblies on triggering Article 50.

Members will be aware that Northern Ireland voted to remain in the EU referendum by a majority of 56% to 44%.

There were two legal challenges from Northern Ireland to the UK leaving the EU – the first, brought by a cross-party group of Stormont politicians, argued that the consent of the assembly was needed as well as legislation in Westminster. The second, brought by victims’ campaigner Raymond McCord, argued Brexit was a constitutional change and the 1998 Good Friday Agreement meant Westminster had given sovereignty of Northern Ireland over to the people of Northern Ireland.

However, the Supreme Court Justices said the peace deal covered Northern Ireland’s place in the UK, not its place in the EU. They found that the devolution acts “were passed by parliament on the assumption that the UK would be a member of the EU, but they do not require the UK to remain a member” and that “the devolved legislatures do not have a veto on the UK’s decision to withdraw from the EU”.

So what happens next?

On Thursday 26 January 2017 the government published its bill to trigger Article 50 and this will now be debated in the House of Commons. Whilst a number of MPs have stated they will vote against the bill, it is widely expected that it will pass, leaving the government free to trigger Article 50. Many consider the requirement to obtain the consent of Parliament a “technicality” as it is not envisaged that the bill will be defeated, a number of amendments to the bill have already been tabled.

What is the likely impact on the UK and Northern Ireland in particular?

Clearly the outcome of Brexit negotiations will have major ramifications for the UK across the board, and in particular for Northern Ireland which is the only part of the UK that shares a land border with the EU.

From a pure HR perspective, the future of the free movement of labour is high up there on the negotiating priority list. Will UK employers still be able to recruit EU nationals? What about EU nationals already working in the UK? There is also the question of UK nationals working in the EU.

The specific implications for Northern Ireland, and the border, are as yet unknown. The customs union currently allows tariff and paperwork-free trade between the UK and the Republic of Ireland. However the Prime Minister has stated, “full membership of the customs union prevents us from negotiating our own comprehensive trade deals” so she will now seek to negotiate a new customs deal with the EU, which would allow tariff-free trade to continue.

In her recent speech the Prime Minister set out a number of further negotiating objectives for Brexit:

the UK will leave the single market, but the Prime Minister wants “the freest possible” trade deal with the EU, including privileged access for industries such as cars and finance;

in order to be able to strike its own trade deals outside Europe, the UK will also leave the EU’s customs union which will release it from the common external tariff;

the government will consider making some payments into the EU budget, but the “vast” contributions of the past will end.

Mrs May would like a trade agreement with the EU to be settled within two years, and Parliament will get a vote on the final deal.

Whilst the Prime Minister also made a direct reference to maintaining the Common Travel Area with Ireland and an insistence that there should not be a hard border, many query how this can be achieved and there remains the possibility that it could lead to the return of some form of customs checks along the Irish border.

In the meantime, Brexit uncertainty is also likely to slow NI’s economic growth in 2016 and 2017 – the most recent Quarterly Sectoral Forecast report published by Danske Bank, suggests that Northern Ireland’s economy will grow by 1% this year and 0.5% in 2017. This has been revised down from the previous report, in which growth of 1.6% had been expected for this year and 1.9% 2017.

Whilst the future shape of UK and EU immigration rules and trade agreements remains under discussion EEFNI will continue to closely monitor the situation and make representations on our Members’ behalf. We will be discussing Brexit and its implications at our Annual Review Conference on 7 June 2017.

The Department for the Economy has recently launched a public consultation seeking the views of interested parties on the potential implications of the Apprenticeship Levy in Northern Ireland, due to be introduced in April 2017.

The collection of the Levy from all employers with a pay bill in excess of £3 million per annum is a matter for the UK Government and will apply across the UK in both public and private sectors. Those organisations with an annual pay bill of more than £3 million per annum will be net contributors to the Levy funds. Those organisations with an annual pay bill of £3 million per annum or less will not contribute to the Levy funds.

At this point in time no decision has been taken on how Levy funding will be re-distributed to employers in Northern Ireland. There is also a concern that if the money raised via the Levy is returned via the block grant, it will not be ring fenced for apprenticeships and may not be spent on apprenticeships or training.

In order to respond to the consultation, the Association seeks the views of Organisations affected by the introduction of the Levy. To do so, we would be grateful if you could provide any responses to the questions below by email (john@eefni.org) by Wednesday, 14 December 2016. The Association will then submit a response to the Department by the deadline of 23 December 2016.

What do you feel are the main issues for Northern Ireland employers from the introduction of the Levy?

As a result of the Levy, what factors should the Department take into account to ensure you can access training to meet the needs of your organisation?

Will you increase the number of apprenticeships recruited to your organisation?

Does the range of employer focused training programmes, outlined in Annex C of the Consultation document, provide a flexible and comprehensive suite of training to meet the future requirements of your organisation?

Should the Department establish a flexible skills fund to support wider workforce development?

Should the Department establish a flexible skills fund to support wider workforce development?